tv Power Lunch CNBC June 1, 2012 1:00pm-2:00pm EDT
>> announcer: the jobs number comes in below expectations. >> may nonfarm payrolls increased by just 69,000 jobs. >> announcer: the markets and investors run for safety. u.s. bond yields hit record lows. >> it's clear that the policies we've seen are not working. >> these job numbers are pathetic. >> announcer: republicans smell blood, an opportunity. >> and i think on the right leadership we can be -- >> announcer: now it's president obama's turn. he's expected to speak at
anyman. and we'll bring you every word. with tyler mathisen at cnbc global headquarters and sue herera at the new york stock exchange. a special edition of "power lunch" on jobs friday begins right now. good afternoon everybody. welcome to "power lunch." we have three topics to talk about this hour. and none could be as important as these three. jobs, stocks and how the run for the white house changed dramatically today. >> indeed it did, ty. we will hear from president obama about today's weak jobs report any minute now. he is at honeywell manufacturing plant in golden valley, minnesota. if you missed it, the unemployment rate, it ticked up to 8.2%, only 69,000 jobs were created in the month of may. that was well below expectations. now, the market impact is being felt all the way across the board. it is a very tough day down here at the nyse. the dow is down 227 points. almost 2%. s&p 500 is off better than 2% or 26 points.
and we're holding at that 1280 level. the nasdaq down 2.25% or about 63 points to the downside today. and, ty, we've also penetrated the 200-moving day average on several of those indices. >> sue, thank you. those are the numbers of course. numbers that affect you and your money. on your screen now are the players as our live team coverage begins. we turn first to scott wapner. >> tyler, thanks so much. a perfect storm really today in terms of a weak jobs report. much weaker than expected here in the united states. weak pmis over in china just underscore that that economy is slowing. europe remains a big problem. and that's what you have. the dow jones industrial average as you see it now is now negative for the year of 2012. 12,161 is where it sits. 12,217 would be flat on the year. dow goes negative for the year of 2012. s&p 500 keep close watch on this today. 1284 is the 200-day moving
average. that was breached as well. look here at crude oil. that story continues to unfold below $84 a barrel. brent is a big story, below $100 as well. the china news certainly weighing on the oil picture today. and how about the 10-year yield? we've talked about it almost every day. an initial plunge on the jobs number, guys, below 150 now sitting at 147. it got as low as 1.45. historic lows on the 10-year. june definitely not getting off to the kind of start that many market participants hoped it had. ty, sue. >> thank you very much, scott. the political implications of this latest jobs report could not be greater. our chief washington correspondent, john harwood, is awaiting the president. but we begin with karl quintanilla who just spoke with the republican presidential candidate and presumptivive nominee, mitt romney. carl. >> ty, the background on this interview this morning when the jobs number came out we knew he
would have some kind of republican response. it was originally going to be vin weber, but perhaps the number was so weak the team felt em boldened perhapsed to speak out directly. he did just talk to us. said the president made it harder for the economy to recover. said the fed is basically should not ease. that any further easing or qe would not do much good. and said that we can't change what happens to the economies in europe and in china. also talked about comparing today's jobs number to the original promises that the white house made when it began stimulus long ago. take a listen. >> the president's policies and his handling of the economy has been dealt a harsh indictment this morning. and it continues. we've had 40 straight months with unemployment over 8%. 40 straight months. and as you recall from the beginning of the obama administration they indicated that unemployment would be kept below 8% for this entire period. they predicted that by now we'd be in the 6s with our level of
unemployment. >> clearly we're not in the 6s. 8.2% now. so we'll keep an eye on what the republicans continue to say about the number. again, a large part of the election this fall, sue, is going to pivot around what the economy does right here in the u.s. >> candidly so, carl. thank you so much. let's head now to john harwood in washington. the jobs report obviously is front and center for the president right now. is there any possible way that he can turn around the negative headline when he comes out and speaks moments from now, john? >> no. but the president can try to address what he sees as the causes of the slowdown. you can expect, sue, he's going to blame europe a lot more than mitt romney was inclined to today. he'll blame congress for not passing items on his jobs program list, his so-called to do list for congress. this is a tough time for a president when attitudes are hardening about how voters feel about the economy. we've had another false dawn for the third spring in a row. it happened in 2010, happened in
2011. we had robust job growth during the wintertime that's now been replaced by this very mediocre and weak job growth slowing overall gdp growth in the economy. and that makes it difficult for the president to say my policies are working, we're on the right track. >> indeed. we will hear from him in just a few minutes. john, thank you very much. the other major story is the all-time record low set in interest rates this morning. the risk-off trade on a global basis is very much in tact today. the flight to safety pushed yields on the benchmark 10-year note to the 4 -- 1.43% at one point. and that has a lot of traders talking about 2008 once again. so let's go to rick santelli. he's in chicago. rick, are those comparisons to '08 fair given what we heard out of china this morning and what we're hearing out of europe? >> well, they're fair in so far as interest rates are lower now than they were throughout the debacles of the credit crisis in
'08. and arguably we're not directly of course tied or able to fix europe. as you look at the intradays of 5s, 10s and 30s, realize -- and this is the biggest glaring way to look at the movement graphically, we're at 75 basis points last friday on a 5-year. we're at 62, we were at 1.65 on a 10 at 1.47. we were at 2.85 on a 30. briefly only maturity wasn't below the '08 levels was the long bond that happened briefly when it slipped under 2.50 today. maybe what's going on in europe can't be addressed directly by the u.s., but we could have had a better cushion if we created more jobs. back to you. >> rick, thank you very much. as we move now to some breaking news coming out from general motors. let's go to phil lebeau who has the details. >> tyler, this is a major move by general motors to cut its massive pension obligation. the company announcing it's offering a lump sum payment to
42,000 salaried retirees. the impact of this depending on how many take up the company is that it would be a net charge of $2.5 billion to $3.5 billion in the second half of this year. more importantly it could reduce pension obligation by $26 billion. that's the reason you see a huge spike in shares of general motors. gm retirees have until july 20th to decide on the lump sum payment. guys, this is a major move by general motors to use some of that cash that it has to reduce its pension obligation. guys, back to you. >> all right. phil, thank you very much. this on a day gm reported double digit sales gains by the way. coming up on "power lunch," president obama in golden valley, minnesota, right now getting ready to speak about jobs and the economy. we're going to carry his speech live as soon as he begins. before the break though, according to intrade, president obama's chances of being re-elected drop as the s&p falls. look at that chart. it's very telling. we'll be back in two minutes.
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as we told you, in just a few moments president obama is expected to address people right now in golden valley, minnesota. he's at a honeywell plant. we'll take that live when he does come out. and of course he will probably address the jobs report this morning, which is affecting a number of the markets. the oil market is not immune. it's also reacting to the news out of china overnight. we're down 3.5% on west texas intermediate crude. brent is down 3.5%. and it's trading below $100. so we have the oil market under severe pressure today, ty. >> all right, sue. as we await the president, the headline of course for most americans is that the unemployment rate goes back up. first tick upward in more than a year. now in our 40th consecutive month of unemployment at 8% or greater. that is the longest such streak going back to the late 1940s. so, where is the u.s. economy headed? and is more fed action on the
way? senior economics reporter, steve liesman, joins us, and deutsche bank chief economist and cnbc contributor is with us. steve, is there anything in these numbers that cast a positive light on the u.s. economy right now? >> no. this was pretty dismal from top to bottom, tyler. i don't think there was a single economist who made an argument that inside this number there was some silver lining. in fact, bob wrote a piece said a lot of clouds, no silver lining, i think was the best way to characterize it. i think the only upbeat ideas you can have for the u.s. economy at this point would be if europe were to take dramatic actions to get its act together. and then you have at least two tailwinds here, which is lower gasoline prices and lower interest rates right now. of course those two go up against the headwinds of fiscal cliff and europe. >> very interesting points. joe, let me turn to you. you had predicted earlier this month that the may numbers would come in around consensus at
about 150,000 new payroll jobs. what did you miss? and right now i believe you're predicting that the second quarter growth rate for the u.s. economy's going to be something like 2.9%. some people might say, what are you smoking, man? >> i tell you what, tyler, they thought the same thing last year when growth was under 1% in the first half. and second half growth averaged 2.5%. so we have to be careful and really getting too nervous about things. a lot of weakness in the first quarter was in defense spending. i don't think that repeats. but the unemployment numbers were certainly weak. it was a surprise for many because the claim numbers suggest job growth should have been better. it was bad. however, i do think, tyler, there is one silver lining in the report. and that is the rising unemployment rate actually was a good thing in the sense that labor force participation went up a couple of tenths. and that was due in part to more people participating in labor market. we had 422,000 gains in the household survey. and unemployment did rise. maybe some people are sensing things are better.
but on balance, yes, it was very disappointing. >> more people coming back into the employment market, steve liesman. but fewer people finding jobs than had been the case earlier this year. we mentioned earlier the possibility that the fed may do something. do you think that's a possibility or not right now? >> i do. i think the chance of fed action has increased as a result of this number. but i don't think it's met the litmus test that's out there. i think the unemployment rate going in the wrong direction is something that might bring the federal reserve as well as inflation being lower. we reported this morning 1.9% on the pc. but let me just say, tyler, there was other data this morning that on balance was okayish, i guess is the best way to put it. those who do tracking surveys, in other words they plug the incoming numbers into their mode models, they're still coming up with 2.5% or so for the next quarter. if we keep a 2 handle on growth and get jobs above 100,000, i just don't think the bar there is low enough for the fed to get
in. >> all right. steve liesman, stay with us. and joe, stay with us as well. we're going to be talking to you throughout the hour. as we watch this introduction being made, the president should be out in a few minutes. that's ryan sullivan of honeywell making that introduction. when the president comes to the podium, we will take that live. quick thought if we could on this jobs report and the political impact of it. joining us mark morial and john kristi former special assistant to president george w. bush. gentlemen, we may have to interrupt you at my point. mark, i'll start with you. your thoughts on this report and whether or not the president can actually turn this around. it is a very tough market for him today and a very tough headline. >> the economy is in suspended animation. and i think that -- >> we're going to the president as he works the crowd. continue talking and as the president approaches the podium, we'll take him. >> the economy remains in suspended animation.
but there have been -- >> why don't you continue your thought as we watch the president work the crowd here? >> yeah. the important thing to keep in mind is that we still have had 26 months of private sector job growth. and those jobs are not being created -- >> hello, everybody. [ cheers and applause ] >> it's good to be back in minnesota. [ cheers and applause ] >> it is good to see your governor here on the way over we were talking about making sure whether the vikings were staying. you know, now that's a hard thing for a bears fan to do. but i was rooting for the vikings second round here. and the governor did a great job. you were praying too, huh? absolutely. prayer never hurts.
it helps. the -- you got two outstanding senators. [ cheers and applause ] amy and al, your mayor is here. outstanding congressional delegation in the house. give them a big round of applause. [ cheers and applause ] i thought ryan was really good. give him a big round of applause. [ cheers and applause ] he's a natural. one of the last times i was here was last august. we took a bus tour around the state. i needed a little minnesota nice.
stopped for some pie. held a town hall in cannon falls. amy and al were there. i think al ate my pie in fact. [ laughter ] i spent a lot of time talking with folks who'd spent the past couple of years making their way through a tough economy. and today we're still fighting our way back from the worst economic crisis since the great depression. the economy's growing again, but it's not growing as fast as we want it to grow. our businesses have created almost 4.3 million new jobs over the last 27 months. but as we learned in today's jobs report, we're still not creating them as fast as we want. and just like at this time last year our economy is still facing
some serious headwinds. we had high gas prices a month, two months ago. and they're starting to come down. they were spiking, but they're still hitting people's wallets pretty hard. it has an impact. and then most prominently, most recently, we've had a crisis in europe's economy that is having an impact worldwide. and it's starting to cast a shadow on our own as well. so we've got a lot of work to do before we get to where we need to be. and all these factors have made it even more challenging to not just fully recover, but also lay the foundation for an economy that's built to last over the long-term. but that's our job. from the moment we first took action to prevent another depression, we knew the road to recovery would not be easy. we knew it would take time. we knew there would be ups and downs along the way.
but we also knew if we were willing to act wisely and boldly and if we were acting together as americans, if we were willing to keep at it, if we were willing to roll up our sleeves and never quit, then we wouldn't just come back, we'd come back stronger than ever. [ cheers and applause ] that was our belief. and that continues to be my belief. we will come back stronger. we do have better days ahead. and that is because of all of you. that's because of all of you. [ applause ] i place my bets on american workers and american businesses any day of the week. [ cheers and applause ] you've been fighting through this tough economy with resilience and grit and innovation. hon
honeywell's a great example of a company doing outstanding work. i want to acknowledge dave coty here who's been serving on my job council and doing a lot of great work. [ applause ] that's why our auto industry's come roaring back. it's why manufacturing is consistently adding jobs for the first time since the 1990s. [ applause ] all that's happening because of you. everybody here plays by the rul rules. we have our responsibilities. and you deserve leaders who do the same. leaders who will stand shoulder-to-shoulder with you and do everything possible to strengthen the middle class and move this economy forward. that's what you deserve.
[ applause ] look, we can't fully control everything that happens in other parts of the world. disturbances in the middle east, what's going on in europe. but there are plenty of things we can control here at home. there are plenty of steps we can take right now to help create jobs and grow this economy. let me give you a couple examples. i sent congress a jobs bill last september full of the kinds of bipartisan ideas that would have put our fellow americans back to work and help reinforce our economy against some of these outside shots. i sent them a plan that would have reduced the deficit by $4 trillion in a way that is balanced that pays for the job creating investments we need by cutting unnecessary spending, but also by asking the wealthiest americans to pay a little more in taxes. [ cheers and applause ]
and i'll give them a little bit of credit. congress has passed a few parts of that jobs bill. like a tax cut that's allowing working americans to keep more of your paychecks every week. that was important. i appreciated it. but congress has not acted on enough of the other ideas in that bill that would help make a difference and help create jobs right now. and there's no excuse for it. not when there are so many people out there still looking for work. not when there are still folks out there struggling to pay their bills. it's not lost on anybody that it's an election year. i understand that. i've noticed. [ laughter ] but, but, but, but we've got responsibilities that are bigger than an election. we've got responsibilities to you. so my message to congress is,
now's not the time to play politics. now is not the time to sit on your hands. the american people expect their leaders to work hard no matter what year it is. the economy still isn't where it needs to be. there are steps that could make a difference right now. steps that can also serve as a buffer in case the situation in europe gets any worse. so right now congress should pass a bill to help states prevent more layoffs so we can put thousands of teachers and firefighters and police officers back on the job. [ cheers and applause ] well, layoffs at the state and local levels have been a chronic problem for our recovery. but it's a problem we can fix. congress should have passed a bill a long time ago to put thousands of construction workers back on the job rebuilding our roads and our bridges and our runways.
[ cheers and applause ] well, since the housing bubble burst, no sector's been hit harder than the construction industry. and we've got all this stuff that needs fixed. remember that bridge here in minnesota? so this is a problem we can fix. let's do it right away. instead of just talking about job creators, congress should give small business owners a tax break for hiring more workers and paying them higher wages. we can get that done. we can get it done right now. let's not wait. [ applause ] right now congress should give every responsible homeowner the opportunity to save an average of $3,000 a year by refinancing their mortgage. we have historically low rates right now. i was with a family in reno, nevada, a couple weeks ago.
they got a chance to refinance. even though their home was under water, put that money back in their pockets because we had taken some steps as an administration to make that available for those who have mortgages held by government agencies like the fha or government guaranteed. but not everybody has those kinds of mortgages. i want everybody to have those same opportunities. i assume there are some folks here who could use $3,000 a year. let's get that done right now. that means they're -- you know, if you got $3,000 a year extra, that helps you pay down your credit cards. that helps you go out and buy some things that your family needs. which is good for business. maybe somebody will be replacing some thing-a-jig for their furnace. they've been putting that off. but they got that extra money, they might just go out there and
buy that thing. [ laughter ] right? [ cheers and applause ] right now congress needs to extend the tax credits for clean energy manufacturers that are set to expire at the end of this year. yeah, i was talking to dave, the issue of energy efficiency and everything we need to do to shift away from dependence on foreign oil, we're making huge progress. we're actually importing less oil than any time in the last eight years. we're down under 50%. but we can do more. and these clean energy companies, they're hiring folks. they're helping us break dependence on foreign oil. it's part of a package of stuff that honeywell's doing a lot of work on. but almost 40,000 jobs are on the line if these tax credits
expire. why would anyone in congress walk away from those jobs? we need to pass those tax credits right now. we need to pass those right now. we need to pass them right now. [ applause ] it's long past time we start encouraging what a lot of companies have been doing lately, which is bringing jobs back to this country. and some of them are coming to minnesota. talking in the car about some companies coming back. red bull, right? coming back. it's time for congress to end tax breaks for companies that ship jobs overseas. let's use that money to cover moving expenses for companies bringing jobs back to america. that would make a difference right now. [ cheers and applause ]
so if those are all steps that we could be taking to strengthen the economy, to provide us some insurance if the situation overseas starts getting worse so we control our own destiny, keep this recovery moving forward. which brings me to the last thing congress should do to help businesses create jobs. that's why i'm here at honeywell today. i believe that no one who fights for this country should ever have to fight for a job when they come home. [ cheers and applause ]
for congress that means creating a veteran jobs corp so we can put our returning heroes back to work. as cops and firefighters, on projects that protect our public lands and resources. and they should do it right now. they should do it right now. but if we're going to serve our veterans as well as they've served us, we've got to do even more. we just observed memorial day, which makes us think about the extraordinary sacrifices so many ma make. we got to make sure we translate words into action. we can't just be in a parade. can't just march. we also have to deliver. for our veterans. now, over the past three decades -- over the past decades rather, more than 3 million service members have transitioned back to civilian life. and now that the war in iraq is over and we're starting to wind down the war in afghanistan --
[ applause ] -- over a million more of those outstanding heroes, they're going to be joining this process of transition back into civilian life over the next few years. now, just think about the skills these veterans have acquired at an incredibly young age. think about the leadership they've learned. 25-year-olds, 26-year-olds leading platoons into unbelievably dangerous situations. life or death situations. think about the cutting edge technologies they've mastered. their ability to adapt to changing and unpredictable situations. you can't get that stuff from a classroom. i mean, these kids -- these men,
these women, they've done incredible work. and that's exactly the kind of leadership and responsibility that every business in america should be wanting to attract. should be competing to attract. that's the kind of talent we need to compete for the jobs in the industries of the future. these are the kinds of americans that every company should want to hire. [ applause ] and that's why here at honeywell, you've made it a mission to hire more veterans. [ cheers and applause ] and let me say dave is incredibly patriotic, loves his veterans, but honeywell isn't doing this just because it feels good. they're doing it because it's
good for business. because veterans make outstanding workers. so today i'm taking executive action that will make it easier for a lot of companies to do the same thing. i've told the story before of the soldier in the 82nd airborne who served as a combat medic in afghanistan. saved lives over there. earned a bronze star for his actions. but he came home here to minnesota, met him on our way to cannon falls. when he first came home, he couldn't even get a job as a first responder. think about it. this guy's out there taking care of troops who are wounded in action, couldn't initially get a job. so then he took classes through the post 9/11 gi bill, classes he could have taught, just so he could qualify for the same duties at home that he performed
every day of the war. let me tell you something, if you can save a life on the battlefield, you can save a life in an ambulance. [ applause ] if you can oversee a convoy or millions of dollars of assets in iraq, you can help manage a supply chain or balance its books here at home. if you can maintain the most advanced weapons in the world, if you're an electrician on a navy ship, you can manufacture the next generation of advanced technology in our factories like this one. [ applause ]
if you're working on complex machinery, you should be able to take those skills and find a manufacturing job right here. right here at home. but unfortunately a lot of returning heroes with advanced skills like these, they don't get hired simply because they don't have civilian licenses or certifications that a lot of companies require. at the same time i hear from business leaders all the time say they can't find enough workers with the skills necessary to fill open positions. 80% of manufacturers say this, according to one survey. so think about it. we got all these openings and all these skilled veterans looking for work. and somehow they're missing each other. that doesn't make any sense. so that's where executive action comes in. that's where we're going to fix it. today i'm proud to announce new partnerships between the military and manufacturing groups that will make it easier for companies to hire returning
service members who prove they've earned the skills our country needs. [ cheers and applause ] soldiers, sailors, marines, airmen, coast guards men, if they have skills in machining or weapons maintenance, for example, you'll have a faster track to good paying manufacturing jobs. service members with experience in logistics or maintenance on the front lines, they'll have a faster track to jobs in those fields here at home. i've also directed the department of defense to establish a new task force charged with finding new opportunities for service members to use the skills they've learned in the military to gain the relevant industry credentials, the civilian certifications and licenses so that it doesn't cost them and they don't necessarily have to
go back to school for three years and take out a whole bunch of student loans when potentially they could do it quicker, more inexpensively and get on the job faster. we're talking about jobs in manufacturing and health care and i.t., in logistics, for first responders. so that returning combat medic that i spoke about, he doesn't have to prove himself over and over again. so this task force first action is going to create opportunities for up to 126,000 service members to gain the industry recognized certifications for high demand manufacturing jobs like the jobs right here at this plant at honeywell. [ applause ] and this builds on the skills for america's future partnership that we launched last year with
the national association of manufacturers to provide 500,000 community college students with industry recognized credentials that will help them secure a good manufacturing jobs. and all of this builds on the steps we've already taken to make sure our returning heroes come home able to share in the opportunities that they have defended. when our men and women sign up to become a soldier, a sailor, an airmen, marine, coast guardsman, they don't stop being a citizen. when they take off that uniform, they're service to this nation doesn't stop. think about previous generations. well, today's veterans are the same. when they come home, they're looking to continue serving america however they can. and at a time when america needs all hands on deck, they've got the skills and the strength to help lead the way. our government needs their patriotism and their sense of duty. that's why i ordered the hiring of more veterans by the federal
government. we've hired more than 200,000 so far. [ applause ] our economy needs their outstanding talent. that's why i pushed hard last year for tax breaks for businesses that hire unemployed veterans and wounded warriors. and i'm proud to say that both parties in congress came together to get that part done. that's why we launched free personalized job services -- job search services through the veterans gold card program and an online veterans job bank to help veterans find jobs that meet their talents. by the way, if there are any veterans here who need those -- >> we're going to break away from the president's remarks at a honeywell manufacturing plant in minnesota. we should note and we're going to monitor that speech as he concentrates on new initiatives to put veterans back to work, we should note that the dow industrials when the president began speaking were down about 220 points on this really down
day in the marketplace. and now down about 252 points. let me bring in john harwood here. the president i guess understandably not mentioning specifically this morning's jobs report. certainly didn't mention any of those numbers there in any kind of pointed way. but he did concede that the economy is not functioning as well as he would like. and we have a long way to go to get it back to where he'd like to see it. >> that's right. he did, tyler, refer to the jobs report when he said that the jobs report is more confirmation that we've got more work to do and that things aren't going as smoothly as we want. growth isn't as robust as we want. as expected, he cited the headwinds in europe as one of the things that's a barrier to growth. he criticized republicans in congress without necessarily referring to the party for not passing some elements of his to-do list for not passing more money for infrastructure and
other elements that the president wants. but, look, this is a tough time. and i think the president was trying very hard to express a buoyant tone. he opened with a joke talking to the crowd there in minnesota referring to the minnesota vikings, that sort of thing. but this is a difficult day for the white house. very good day for mitt romney as we saw in his interview with us a little while ago. >> john harwood, thank you very much. and we're going to continue our conversation about the changing economic and political sands that this morning's jobs number have presented us to talk about today after this short break. we'll be right back. i'm making my money do more.
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trading session, there isn't much that's in the green today. with the dow down almost 2%, the nasdaq's off 2.5% now. s&p off better than 2%. gold is up $60. that's almost a 4% gain. and west texas intermediate crude down about 3.75% on the trading session. for more details on that, mary thompson joins us to reset the market. it's an ugly day down here. >> it is and got uglier over the last 20 minutes or so. sue, during the president's speech, market hitting session lows. a trend set earlier today with the jobs report, dis appoiappoi data out of china and india as well. the dow jones industrial average as you mentioned downright now 232 points, but the index i've been watching throughout the day is the s&p 500. sue, you mentioned it early, breaking down technically. when we came into today's session the number to watch was 1284 in the s&p 500. that's its 200-day moving average. it's moved below that now and remains there.
again, if it finishes below that, that would suggest further weakness to come for the s&p. now, it's been moving very closely along the lines of what the euro has been doing. we actually saw the euro pop on the jobs number, the bad jobs data here in the u.s. and when the euro erased some of its earlier gains, the s&p moved lower there. you can see the euro actually holding onto those gains. there appears to be a bit of a break there. once again, the s&p in correction territory, the nasdaq thrust into it earlier today as did the russell. back to you, sue. >> thank you very much, mary. june is kicking off how may ended. so what do investors need to know going into this crucial month? simon hobbs is drilling down on what's ahead for europe and its debt crisis? >> we know the market is very well aware that there are going to be two monumental decisions made in europe over the next few weeks. but first it's clearly greece now going into a blackout period on opinion polls. they will have their election two weeks from this weekend on the 17th. sunday the 17th. you know that if the greeks
return to government that can work with the rest of europe and not forced out of the eurozone, you will get a major rally in risk assets around the world and the converse could be true. they could plunge if you get different results. the decision angela merkel has to make and they have a summit at the end of the month is whether or not she's going to go the last leg on a european union, whether there will be euro bonds or more likely whether there will be an eu-wide bank policy that guarantees bank accounts. will she do it? will the germans do it? again, if she says yes, a major risk rally will erupt. if she says no, you will see the markets plunge down. you saw on that graph they've arranged a second minisummit just after the greek election and before they go into the full summit of all 27 leaders at the end. it is two major monumental decisions. and they, sue, are going to mean everything to the markets. back to you. >> indeed, simon.
thank you very much for bringing us up to date. we have much more on the market selloff after a quick break. in correction territory for the nasdaq, s&p and the broader based russell 2000. the yield on the 10-year at a record low, the 30-year just hit a record low in terms of its yield. the safe haven play is alive and well in today's market. "power lunch" is back in two. like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering, web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
let's look at the s&p 500 briefly. it's crossed into correction territory meaning that it is down 10% or greater from a recent peak. now at 1280.88, down 30 points. about 2.25% today. back down to mark morial and ron christie. we've heard from governor romney. he points out 8% unemployment for more than 40 months. worst performance since the 1940s. he can't be happy about this in terms of what it means for america. but it certainly gives him the key issue in this campaign going forward. >> i think it does. good afternoon, tyler. listening to the president's speech a few moments ago, i was struck by the fact that the president almost acted as if he didn't preside over the united states for the last three and a half years. he didn't talk about his stimulus program. he didn't talk about his
predictions that the economy at this point would be -- the unemployment rate would be at 6%. and i think this is a real opportunity for governor romney right now to seize the reigns and to suggest that president obama's leadership hasn't worked on the economy and creating jobs. and it gives him, romney, the opportunity to say we can do better, we must do better and i'm the man to get it done. >> mayor morial, if you were advising the president, how would you tell him to play it? >> i think he hinted at a harry truman-approach. which is to contrast his plan versus a congress that sits on its hand. the president talked about his american jobs act and the fundamental need for us to do more. and i believe, and the urban league believes there needs to be more fiscal and monetary stimulus to stimulate the demand in the economy. not this idea there's nothing to do. i was struck by governor romney in that he offered no ideas. certainly it's easy to offer a critique of the situation and of
the president. but this race i think is going to be a contrast between the president's record and ideas for the future versus i think the governor's idea that the policies of the past ought to be resurrected. >> mayor morial, ron christie, we have to leave it there. thank you. we understand that the news events squeezed our time a little bit. >> thank you. >> next up, see how the floor traders are playing today's big drop. before the break though, some etfs that are short the market. and that's where you want to be today. piro. over a million people have discovered how easy it is to use legalzoom for important legal documents. so start your business, protect your family, launch your dreams. at legalzoom.com, we put the law on your side. tdd# 1-800-345-2550 you and your money deserve. tdd# 1-800-345-2550 at charles schwab, that means taking a close look at you
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this is the pursuit of perfection. welcome back to "power lunch." i'm jackie deangelis with a quick market flash. we are watching human genome and glax sew smith clien. a statement regarding glaxo-smith saying the board of directors has rejected saying the offer is inadequate not expressing inherent value within the company. they are looking at strategic alternatives and invited gsk to participate in that discussion, but they came back with this bid which they are rejecting $13 per share. we're looking at both of those
stocks down 1.25% each right now. sue, back to you. >> thank you very much, jackie. with the dow down almost 260 points, let's talk to our traders. kenny joins us from i cap, oil trader anthony, bond trader alan and zach karabell back at hk. all talking about these markets today. kenny, i'm going to start with you. you said to watch the 1280 level and we penetrated it or got close to that. what are you going to do at the end of the day? >> in fact, we have penetrated it. what i would expect to see at the end of the day is if we don't rally above it, you're going to see pressure on the end. sales are going to see if the buyers are really there going into the weekend. there's not a lot of day trader fast money guys that want to hold a position over the weekend. so their going to want to unload it. long-term managers will find this as an opportunity. whether or not they stand at 1280 and support or back off a little let the sellers come to them. that's what we'll see at the end of the day. >> zach, do you agree? >> i'm not going to make a
market call based on the last few hours. we have some where you thought would have sold off really really hard that just aren't. whether it's names already taken to the wood shed like joy global. it's interesting that some of these names, slumber je up a bit. they've sold off so intensively on anticipation of weakness we're now seeing that they've become early buy opportunities in the midst of a very, very weak market. >> alan, how much lower will we see interest rates move? it's a little scary for those of us that remember the '08 financial crisis. >> it's not just an investment opportunity to go into bonds at this point. you're locking in essentially, you know, negative yields if you factor in any inflation with the 10-year and 30-year. so you've got to look for money has to flow somewhere. the question is where is it going to flow? are you going to be a seller if the market's gone down 20%? there's going to be value in looking at the dollar index. you're getting some clues there. it's at two-year highs. right now it's almost 15% above
where it was last summer. that's not sustainable. this flight to quality in the dollar is not sustainable. when it unwinds some, we see key reversal today, new highs and now we're lower. that could reflate some assets. you might see some assets from here. but the big wild card, like you talked about the bonds are not just a viable asset to go into. >> okay. anthony, what's the trade on oil? dramatic selloff in that commodity as well today. >> yeah, well, sue, when you listen to the president's speech, you realize he doesn't have any new ideas for this economy at all and he's clueless at this point. when you look at this opposed to oil, you have to sell any rallies that come into this market. trader pointed out to me that $75 was the real decent support, the real good support that we hit i believe was in october or november of last year. and really the way the economy is right now, i think we're going to take a shot for that. the only thing that i could see that might help support this market is that because of the bad jobs number there's been a lot of talk about quantitative easing. when you talk quantitative easingnd